Tax saving ideas for landlords

Being a property landlord can be a stable source of income for many people across the UK, as they provide a service to renters. But earning money from being a landlord is a business like any other, and they are liable to pay tax on any form of income they generate. If you are a UK citizen and you own and rent a property somewhere across the UK, you will have to pay a category of landlord tax; this is unavoidable.

It can be easy to be confused by the rules around the taxation of landlords, and it may well be the case that, as a landlord, you are paying too much. Tax advice and management is a really important aspect of being a great landlord, as small changes can be the difference between a healthy profit and just scraping by.

Here we take a look at some important ideas for saving on tax and better tax management for landlords in the UK.

Create a limited company

The first thing to say is that if you want to manage your tax as easily as possible, one option is to form a limited company that you use as a landlord. This can really help by first being able to separate your personal life and finances from those of your landlord finances. But it also has some important tax considerations.

Being a company allows you to offset your expenses against your profit, and it also gives you the option to have someone else manage elements of the property management. It’s a solution that might not be right for everyone, so it is worth discussing it with an accountant experienced in working with landlords.

Understand and make use of tax bands

It is the case that Capital Gains Tax is not usually paid when assets are transferred between spouses. This means that you may well be able to reduce your tax liability by moving some of your assets into the name of your spouse – this could allow you to make use of a lower tax band.

If your spouse’s tax bracket is lower than yours, you may also be able to pay less tax on your rental income as well. And, as long as the property doesn’t have a mortgage and you aren’t taking financial gain from it, you won’t need to pay stamp duty.

Invest in your properties

Landlords are sometimes criticised by tenants for failing to put enough investment into the upkeep of a property. In truth, investing in the properties can be extremely useful from a tax perspective –

not only in terms of renovating and refreshing the property, but also looking into the possibility of extending it.

Of course, it is important to take into account the maximum rental yield you are going to get from a property in the area. Overspending might result in a better tax situation, but you won’t be able to make up for it in terms of the cost of the project.

Consider the possibility of short-term lets

You might be used to managing long-term lets, and this can work for many landlords. But you may not have considered the potential benefits of short-term lets.

One of the major advantages of short-term lets is that it gives you the chance to regularly evaluate the value of the property. That means you can always get a rental yield that is sensible for the area. If you are locked into a long-term contract and the local area rises in popularity, this can mean that you are missing out on income.

Speak to an experienced accountant

Every landlord has different tax needs, and possibly the most valuable thing that you can do is speak to an accountant who has specific experience dealing with landlords and helping them to manage their taxes.

If you would like to learn more about the possibilities of reducing your tax as a landlord, get in contact with the team at Wellden Turnbull today. We would be happy to provide you with more information.

Equality and Diversity

Under our Probate licence, we are required by the ICAEW to complete a diversity data survey and to publish a summary of results on our website.

We have just completed our 2021 survey and are pleased to confirm the results of the survey reflect our company policy on equality and diversity.

We do not discriminate against anyone of the grounds of age, colour, race, ethnic or national origin, sex, sexual orientation, religion or disability.

Wellden Turnbull always aims to treat everyone with respect, consideration and for each employee to feel respected and able to give their best.

We are also committed against unlawful discrimination of clients.

Mary Harris Smith: the world’s first female Chartered Accountant

You might not be aware that it wasn’t until 1920 that women were allowed to be recognised as Chartered Accountants. The very first woman to take that mantle was Mary Harris Smith; this is her story.

Destined to be a great accountant

Mary Harris Smith was born in 1844 in London, and it was apparent from very early in her life that she was a gifted mathematician. Her father, a clerk to a navy agent and a banker, recognised her abilities and encouraged her. At 16, she was studying with a Master of King’s College School, before taking bookkeeping classes.

In 1887, Mary set up her own accountancy firm trading as a M. Harris Smith, Public Accountant. She had huge success and made a good living. It was said that her reputation was such that she was regularly requested to audit the accounts of organisations.

Her first application

While she had success as an accountant and was living comfortably, she yearned for the status and prestige of being a Chartered Accountant. She first applied for membership in the Institute of Chartered Accounts in England and Wales (ICAEW) in 1891, believing herself to be fully qualified to do so.

She was turned away on the basis that women could not be recognised as Chartered Accountants. This decision unsurprisingly rankled her. In 1895, she was quoted saying “Require of me what you would require of a man and I will fulfil it.”

The successful application

She made multiple further attempts to become a member but was turned down each time. Despite her years of accountancy expertise and stellar reputation, it was against the rules. However, thankfully, change was on the horizon.

The Sex Disqualification (Removal) Act was passed in 1919 which made it illegal for ICAEW to refuse to admit accountants based on their sex. Mary applied to ICAEW again and this time she was recognised as the first female Chartered Accountant.

It clearly meant a lot to Mary to be recognised in this way. She was 75 when she was finally admitted as a Chartered Accountant, and she continued working into the late 1920s until her health started to deteriorate.

Blue plaque

It was in May 2020 that the City of London chose to honour Mary’s life – it was the 100th anniversary of her being accepted by the ICAEW as a Chartered Accountant. A blue plaque was commissioned to be placed in the City – one of just three plaques (out of 182) that celebrate the life of an individual woman.

The plaque will stand at the corner of Queen Victoria Street and Bucklersbury, which is close to where Mary’s office was situated when she was awarded her Chartered status.

A progressive campaigner

As well as being the first female Chartered Accountant, Mary was a vociferous campaigner for progressive women’s rights and feminism. She was a proud supporter of the famous campaign for women’s suffrage and was also involved in movements such as the Society for Promoting the Employment of Women, and the National Union of Women Workers.

Having lived almost her whole life in London, Mary enjoyed retirement in St Leonard’s on Sea in East Sussex and died there in 1934.

 

We hope you enjoyed learning about Mary Harris Smith, the world’s first female Chartered Accountant. If you are interested in working with a Chartered Accountant on any issue, please don’t hesitate to get in contact with our experienced team today.